...In September of 1983, Costco Wholesale Corporation began operations in Seattle, Washington. The company was founded by James Sinegal, current President and CEO of Costco, and Jeffrey Brotman, Chairman of the Board of Directors. In October of 1993 Costco merged with a Delaware company called The Price Company to form Price/Costco, Inc. The price company was the first to establish the concept of a membership warehouse. In 1999, the company changed its name to Costco Whole sale Corporation and moved themselves back to Washington. Costco is currently one of the largest retail stores in the industry, it operates 335 warehouses throughout the United States, Canada, Mexico, England , Scotland , Japan, Taiwan and Korea. Costco now employees a staff of approximately 2,000 at it’s Home Office in Issaquah , Washington, and counts nearly 80,000 employees worldwide. Costco is a mission driven company, and their mission is to continually provide our members with quality goods and services at the lowest possible prices.(Costco.com) In order to achieve their mission , Costco conducts business with the following Code of Ethics : obey law, they have to take care of their costumers, take care of their employees. As James Sinegal said “ And if we do those things, we think that we will reward our share holders” (abcnews.go.com) And to reward the shareholder is ultimate goal of Costco. Costco conducts business in total compliance with the laws of every community where they do business. They comply...
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...costco.com.au/About/AboutCostco.shtml 1. History In 1976 Price Club was founded in San Diego, California. A year before their business reached over $1 billion dollars in sales, Costco opened its first warehouse in Seattle, Washington. In 1986 Price Club had 22 locations and 3.2 million members while Costco had 17 locations and 1.3 million members. In 1993 these two companies formed under a merger, but it wasn’t until 1997 that they changed their name from PriceCostco to Costco Companies Inc. Costco’s mission is to offer quality, brand name products at a substantially lower rate than their competitors. Although Costco targets small-to-medium-sized businesses in large cities throughout the world to help reduce costs in purchasing for resale and for everyday business use, they also sell to customers for their personal needs. Businesses and large families are Costco’s greatest customers. "Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass on dramatic savings to our members." Soon after their merger, Costco introduced their Kirkland Signature brand name- products that boast to be of equal or better quality than leading brands. Some of the products under the Kirkland label include juice,...
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...HBS Case Study 2: Costco Wholesale Corporation Financial Statement Analysis (A) Lee Hathaway MMS 185: Managerial Finance Professor Veraldi September 27, 2007 It is important for stockholders to continuously re-evaluate their investments. Although some investors do this more frequently and thoroughly than others, the majority of shareholders do so at least once each year. Therefore, Torres’ desire to update her analysis in order to determine whether Costco was still operating efficiently makes perfect sense. After thorough examination, my analysis proves that Costco remains one of the industry’s leading competitors and there seems to be no reason for Torres to sell her shares as long as she wishes to retain holdings of a retail wholesale club in her portfolio. The common-size financial statements evaluating the period 1997-2001 (exhibit 9) reveal valuable information regarding Costco. Torres noticed that there were two revenue lines: net sale of goods and membership fees. She decided to use net sales of goods as the point of comparison and express other line items, including membership fees, as a percentage of net sales in order to allow for a clearer reflection of gross and operating margins. This format enabled her to analyze the profit and asset structures of Costco over time. To begin, Margarita Torres’ common-size financial statements for Costco demonstrate a rise in membership fees and other sources of revenue from 1.82% in 1997 to 1.93% in 2001...
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...Clarence Morris Case Analysis 1: Costco Wholesale MGT 442Strategic Management & Business Policy Dr. McDaniel The first Costco store began operations in Seattle in 1983, the same year that Wal-Mart launched its warehouse membership format, Sam’s Club. Jim Sinegal (CEO) and Seattle Entrepreneur Jeff Brotman (now chairman of the board of directors) founded Costco in 1982. Jim Sinegal derived the idea of a warehouse membership format while working out in San Diego as a manager for his mentor Sol Price’s Price Club. Sinegal had a special knack for discount retailing and for spotting what a store was doing wrong (usually either not being in the right merchandise categories or not selling items at the right price points). Sinegal was constantly improving store operations, keeping operating costs and overhead low, stocking items that moved quickly, and charging ultra-low prices that kept customers coming back to shop while at Price Club. The first Costco Warehouse opened in September in Seattle, Washington. By the end of 1983, two additional locations had opened in Portland, Oregon and Spokane, Washington. The fourth Costco warehouse opened in Salt Lake City, Utah in 1984 and by calendar year-end, there were nine Costco’s in five states serving over 200,00 members. In October 1993, Costco merged with The Price Company, which had pioneered the membership warehouse concept in 1976, to form Price/Costco, Inc., a Delaware corporation. In January 1997, non-warehouse assets were...
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...STANFORD GRADUATE SCHOOL OF BUSINESS CASE: A-186A DATE: 06/19/03 CosTco WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS (A) INTRODUCTION Margarita Torres first purchased shares in Costco Wholesale Corporation in 1997 as part of her personal investment portfolio. Between 1997 and 2002, she added slightly to her holdings from time to time when the company sold stock for what she felt was a reasonable valuation, and up to that time she did not sell any of her shares. Having watched Costco grow from 265 warehouses to 365 worldwide, and from sales revenue of $21.8 billion to $34.1 billion, she wondered what factors led to such successful growth. She also wanted to determine whether those factors would hold consistent going forward. At this point, Costco was one of a special breed of retailers called wholesale clubs. Unlike other retailers, wholesale clubs required that customers purchase annual memberships in order to shop at their stores. Costco operated a chain of warehouses that sold food and general merchandise at large discounts to member customers. The company was able to maintain low margins by selling items in bulk, keeping operating expenses to a minimum, and turning inventory over rapidly. Costco’s closest competitors were SAM’S Club (a division of Wal-Mart) and BJ’s Wholesale, which both operated as wholesale clubs. Other competitors included general discounters (such as Wal-Mart), general retailers (such as Sears), grocery...
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...merchandise that include a mix of across the country branded and illicit private-label products in an exceedingly wide selection of merchandise classes. This is an awfully appealing business model because it provides the power to control fruitfully at a lot of lower profit margin by securing marketer volume getting agreements, economical distribution, no-frill self-service warehouse facilities and supplemental membership fee revenue. Another magnet is because of the high sales volume and fast inventory turnover style of this business model, the accelerated money conversion cycle permissible Costco to gather the funds for inventory before marketer liabilities changing into due. This provided for marketer finance and also the ability to require advantage of early payment discounts that additional reduced operational prices. As a testament to the success of this business model, from 2008 through 2011, Costco was able to increase the amount of warehouses by 15.6%, revenues by 22.6%, and earnings by 14.0%. 2. What are the chief elements of Costco’s current strategy and is it effective? Costco’s...
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...Clubs: Costco Wholesale vs. Sam’s Club vs. BJ’s Wholesale Tami Bouldin-Golt March 1, 2013 Provide an overview of the company and/or industry and add any pertinent information relevant to the case (5 points) From eggs to tires to coffee, the everyday consumer can find whatever he or she needs in a warehouse club; at a much lower price from the common retailer the drawback: annual membership fee. The warehouse industry operates on the idea that by customers buying memberships to shop at their locations, the companies can afford to lower their prices beyond that of major retailers. The idea of having a membership to shop somewhere not only allows the company to lower prices but also creates a loyal customer base that tends to come back year after year. There are three major competitors in this industry, Costco Wholesale Corporation, Sam’s Club (a subsidiary of Wal-Mart), and BJs Wholesale club. Costco and Sam’s Club opened in 1983 to immediate success. By the end of 1984, Costco had nine stores and over 200,000 members and became the first company to reach over $1 billion in sales within the first six years. Sam’s Club had sales in excess of $12.3 billion within 10 years. Both companies rely on a low-cost strategy. B J’s is considerably smaller than Costco and Sam’s club but has still maintained success behind a best cost strategy. While BJs has fewer locations, their stores offer over 7,000 products compared to 4,000 at both Costco and Sam’s...
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...“Costco is a warehouse that offers members a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories. We concentrate on our mission to continually bring quality goods and services to our members at the lowest possible prices, while being responsible corporate citizens, taking care of our members and our employees, and respect in our vendors.” (Annual Report 2010)” Costco is the way to go when it comes to online and in-store shopping. The retail chain store ranked No. 1 in a recent Consumer Reports survey of 10 stores — besting JCPenney, Kmart, Kohl’s, Macy’s, Meijer, Sam’s Club, Sears, Target and Wal-Mart for its overall shopping experience, according to ConsumerReports.org. This is not an easy feat, considering they opened their doors in 1983, only selling to small businesses. There are numerous reasons why Costco has become a huge phenomenon amongst shoppers; these eight warehouse trends have been the reason for their success. While Costco has seen more profit through these trends, the warehouse industry is growing. Firstly, warehouses are striving to become more environmentally friendly and customers have gained notice of this. Since this is a national trend, it boasts their appearance as a customer friendly store. Secondly, Warehouses have expanded their stores to be more competitive in the marketplace. This is due to the growing number of these types of stores, and their desire to have a competitive edge...
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...Costco Wholesale Corporation is the largest membership warehouse club chain in the world. The company is headquartered in Issaquah, Washington, United States. Costco's first location, opened in 1976 under the "Price Club" name and it was housed in a Quonset shed in San Diego. The company’s one of the kind model serving mostly regions with a large number of small business owners and higher income professionals with a demand for high end goods proved to be the winning formula. Accomplishment encouraged James Sinegal and Jeffrey Brotman to open the first Costco warehouse location in Seattle which is still the company’s flagship location. The new project proved very successful; Costco became the first company ever to grow from zero to $3 billion in sales in less than six years. In 1993, Costco and Price Club merged, forming "PriceCostco." The combined company had 206 locations generating $16 billion in annual sales and created the company's current structure. Costco's web site was first introduced in 1995, and it started conducting e-commerce in 1998 at Costco.com. In 1997, PriceCostco changed its name back to Costco, under which the company currently operates. Costco has also changed the site of its corporate headquarters from Kirkland, Washington, to Issaquah. As of December 18, 2009, Costco has 566 locations: 413 in forty U.S states and Puertorico, 77 in Canada, 32 in Mexico (joint venture with Comercial Mexicana), 21 in United Kingdom, 9 in Japan, 7 in South Korea, 6 in Taiwan...
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...Factors on Marketing Decisions of Costco Wholesale Corporation Environmental factors consist of all the factors and activities which have a considerable impact on the running of the business. Environmental factors have a powerful impact on the normal functioning of the any business, especially in the marketing decisions (Pagell & Halperin, 2000). These factors pose challenges and threats to the success of any business. In order to deal with such environmental factors a firm should enhance its core competencies and make sound strategies (Staff, 2009). There are various factors which would have deep impact on these new services offered by the firm. The firm should make a strategy after considering these factors. David Jobber describes in his book that with the help of this analysis, the company becomes more competitive and effective to implement the various strategies (Jobber, 2001). Costco Wholesale Corporation is one of the biggest organizations in the retail industry, which operates at the global level. The company was founded by James Sinegal and Jeffrey Brotman (Costco Wholesale Corporation, 2009). On the basis of the sales volume, the company is considered among the world's largest membership warehouses (Costco: About Company, 2009). The company has taken the position of the five largest companies in the United Sates in retail Industry. The Headquarter of the company is situated at Issaquah (Washington) in the United States (Costco Wholesale Corporation Reports...
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...Overview: Costco was founded by Jim Sinegal and Jeffrey Brotman. Costco opened its first warehouse in Seattle, Washington, on September 15, 1983. Siegal had started in wholesale distribution by working for Sol Price at both FedMart and Price Club. In 1993, Costco merged with Price Club. Costco’s business model and size were similar to those of Price Club. In 1997, PriceCostco changed their name to Costco Wholesale and all the Price Club locations were rebranded to Costco. Costco was the first company in the industry to grow from zero to $3 billion in sales in less than six years. Costco use the competitive strategy the best-cost provider in the wholesale club membership category. Costco has the purchasing power, high sales volumes, quick inventory turnover, and excellent customer service. The chief elements of Costco strategy are pricing, limited product selection and what the company calls “treasure-hunt merchandising, this is high end product that is acquired in the gray market from other wholesalers or distressed retailers looking to get rid of excess or slow-selling inventory. 1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? The business model that Costco employs is that they are able to provide quality goods and services at the lowest possible prices. This business model is appealing as it firstly, allows Costco to generate high sales volume and rapid inventory turnover by offering members very low prices and select private-label...
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...Costco Corporation By: Tiffany Cosby Professor Aleakhue Yekpabo Human Resource Management 01/24/2014 I decided to research and write about Costco warehouse. I can relate to this company because my husband is employed there and it has become one of my favorite stores. Costco has the best prices. It is a membership warehouse club, providing its members with the best possible prices on brand name quality merchandise is one of their priorities. They offer a refund on membership if a customer is not satisfied and will guarantee satisfaction on every product or your money back. This says a lot about the brand of the company. The founder of Costco Sol Prince stated that his secret is to sell things as cheap as possible. Since resuming the name Costco in 1997, the company has grown worldwide with total sales in recent fiscal years exceeding $64 billion (Costco). As of December 2013, the Company operated a chain of 648 warehouses in 43 states, Washington D.C., and Puerto Rico (461 locations), nine Canadian provinces (87 locations), Mexico (33 locations), the United Kingdom (25 locations), Japan (18 locations), Taiwan (ten locations), Korea (nine locations), and Australia (five locations). The company's online business operates websites in the U.S., Canada , U.K, and Mexico. The membership format is designed to reinforce member loyalty and provide continuing fee revenue. Members can utilize their membership at any Costco location in any country. The two types of memberships...
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...:Business and ManagementCostco Case Study RecommendationCostco was the td largest retailer in the United States and the eighth largest in the world. They have a similar strategy like the other wholesale industry stores of selling top-quality merchandise at lower prices than other stores.To sustain the company’s growth Costco needs to keep adding stores every year. They make more money in memberships per year than they do in net sales. Where they add the new stores is important. Adding more stores internationally could increase market shares and make them more powerful. It would also increase the currently 10% operating income for stores outside of the United States. London, India, and Japan are good places to add stores. They could also stores internationally close to where other wholesale stores are currently located for competition.Also to improve the company’s financial performance they need to add new store services. They cannot rely on only memberships to keep them in the black. A great goal to have is to make sure all stores have a fueling station right outside the store. They strategically place all of their stores in high traffic areas so a gasoline station with all of the stores is a vital move for the future. Adding services like check cashing, money gram and ATM’s will boost financial performance also. Since they do not accept all credit cards, acquire a way to get money to pay for the items they are going to purchase in one place is a great tool for a one-stop-shop...
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...Costco Pharmacy POM Audit Team 7 Executive Summary Design of Goods and Services- Costco can be seen to be in their maturity stages of their life. Therefore, it is recommended for Costco to expand its Pharmacy department by at least 50%. Process Design-Costco processes prescriptions and provides the prescribed drugs to customers. For each prescription, pharmacists carefully review the dosage along with other drugs you may be taking in order to prevent any chance of medications interacting with each other. They also ensure you do not receive any medication which could result in an allergic reaction. It is recommended to introduce E-prescribing in the near future as it would reduce the duration for each prescription process. Layout-The Costco Pharmacy Layout can be defined as a Retail Layout. The main objective of a retail layout is to maximize profitability per square foot of floor space. However further research will need to be conducted to make a recommendation Capacity- Even though the pharmacy department is not operating at 100% efficiency, it is still using and managing their facilities effectively, operating at 72% efficiency on a daily basis. However, future capacity planning is required as the efficiency capacity is increasing as population grows. Productivity- The labor productivity is currently5 units per labor hours while the multifactor productivity is 0.040 units per dollar. After auditing Costco’s productivity it was found that Costco should aim to increase...
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...Case Study Costco: the Culture fit in Japan CONTENT 1 Introduction 1 2 Costco’s Human Resources Policies and Practices in United States 1 2.1 Recruitment 1 2.2 Compensation and Benefits 2 2.3 Career development 3 3 Culture differences between US and Japan 3 4 Costco’s human resource policies and practices in Japan 6 4.1 Costco in Japan 6 4.2 Costco’s human resource policies and practices in Japan 7 4.2.1 Recruitment 7 4.2.1.1 Student Program 7 4.2.1.2 Job Posting System 8 4.2.2 Compensation and Benefits 9 4.2.3 Career development 9 5 Conclusion 10 1 Introduction Costco Wholesale Corporation operates an international chain of membership warehouses, which carries quality, brand name merchandise at substantially low prices. As of 2014, it is the second largest retailer in the United States and the third largest in the world and the largest membership warehouse club chain in the United States. Costco currently operates 671 warehouses, with 189,000 full and part-time employees all around the world. As of 8/31/2014, there were 160.3 Million membership owners and the annual revenue of fiscal year 2014 was $112.6 billion. 2 Costco’s Human Resources Policies and Practices in United States In the United States, Costco is famous for its generous to employees. Despite the sagging economy and challenges to the industry, Costco pays its hourly workers an average of $20.89 an hour, not including overtime (vs. the minimum wage of $7...
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